Forexpros – Gold futures fell Thursday, as global economic worries triggered a risk flight to the safety of the U.S. dollar weighing on commodities.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,656.25 a troy ounce during U.S. afternoon trade, giving back 0.26%.
It earlier declined by as much as 0.95% to trade at USD1,647.05 a troy ounce, the lowest since March 23.
Gold futures were likely to find support at USD1,627.75 a troy ounce, the low from March 22 and short-term resistance at USD1,699.55, the high from March 27.
Gold tracked movements in the greenback Thursday. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices.
The single currency came under pressure amid concerns over excessive Spanish borrowing costs ahead of the release of the government’s budget statement on Friday.
There are additional fears that the government will fail to implement harsh austerity measures to slash the country’s deficit, in the face of public unrest as a major general strike got underway Thursday.
Gold traders are anticipating a meeting of euro zone finance ministers on Friday with expectations that they would agree on a larger debt firewall to combat the debt crisis in the region.
Meanwhile, ongoing concerns over the global growth outlook further weighed on sentiment, prompting investors to reject riskier assets, such as stocks and commodities.
In the U.S., the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. fell by 5,000 to a seasonally adjusted 359,000 last week, the lowest level since April 2008, but less than expectations for a decline to 350,000.
A separate report showed that the U.S. economy grew at an annualized rate of 3.0% during the final three months of 2011, unchanged from a preliminary estimate.
Investors are also concerned about recent signs of a slowdown in China.
The news boosted demand for the relative safety of the U.S. dollar. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.12% to trade at 79.39.
A stronger U.S. dollar usually weighs on gold, as it weakens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies..
Elsewhere on the Comex, silver for May delivery gained 0.58% to trade at USD32.02 a troy ounce, while copper for May delivery dipped 0.05% to trade at USD3.79 a pound.
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